State's Congressmen Wait on Auto Bailout

Press Release

By Alex Daniels

The failure of the U. S. auto industry would have a devastating impact on the economy, members of Arkansas' congressional delegation agree. They also see a Congress locked in disagreement over whether a government bailout is the right course of action.

"It's not acceptable that these companies just vanish from the Earth," Democratic Rep. Marion Berry said. "It would be a nightmarish situation." Berry, like other Arkansans on Capitol Hill, entered the weekend not knowing whether a plan to provide billions of dollars in loans and lines of credit would even come up for a vote next week.

Friday evening, The Associated Press reported that congressional Democrats and the White House were close to an agreement on about $ 15 billion in bailout loans for the auto industry.

House Speaker Nancy Pelosi's office issued a statement saying legislation would come to a vote in the House next week.

Earlier Friday, for the second day in a row, the top executives from General Motors Corp., Ford Motor Co. and Chrysler LLC made their pitch for federal help. Testifying before the House Financial Services Committee, they told lawmakers that they needed $ 34 billion from the federal government to stay afloat.

The request came two weeks after the three executives first asked for $ 25 billion. They were told then to come up with plans on how they would use the money and detail how they would reduce costs in the future and remain competitive globally.

Arkansas' U. S. Sen. Blanche Lincoln, a Democrat, called the plans they offered incomplete. She said members of the Senate Banking Committee would work through the weekend on a proposal to present to the chamber next week.

The Bush administration has argued that the companies should be able to use some of the $ 25 billion made available last spring to upgrade their plants so they could build more energy-efficient cars.

Lincoln said that option, apparently part of the deal reached by Pelosi and the administration Friday night, might be workable, but she faulted the administration for not directing some of the $ 700 billion set aside in October for the Troubled Asset Relief Program, which was to be used to bail out the financial sector. Lincoln said those funds could be loaned to Detroit's Big Three at the discretion of the U. S. Treasury.

"They keep telling us to do something," Lincoln said of the Bush administration. "I don't know why they're not doing anything. Maybe they think it's got to be the next administration." One option is for Congress to step back and let the companies deal with the situation on their own, presumably through the bankruptcy process.

Such a course of action, Lincoln said, wouldn't be "forbidden." The Senate is to be in session Monday afternoon, with no votes scheduled. Many House members will be in Washington for a White House Christmas party that day, and for party caucuses later in the week.

But the lack of consensus between Congress and the Bush administration, or within the Senate, made it uncertain Friday evening whether an automobileindustry bailout would be on the agenda.

House member Berry said the Senate should act first.

"It would be a complete waste of time for us to do something," just to have it die in the Senate.

The car-company executives said they were open to receiving money in stages, so lawmakers could check in on whether management and unions were making progress in cutting costs and sending more efficient cars off the assembly line. But Arkansas' U. S. Rep. John Boozman, the delegation's only Republican member, said that still might not result in a "sustainable business model." Except for members in districts with a heavy concentration of autoworkers, Boozman said, he doubted that a car-industry bill would get many Republican votes. "It would more or less be a Democratic vote, and I don't think [Democratic leadership ] would want to do it" unless it had support from members in both parties.

Boozman said a deal could emerge over the weekend but he wasn't favorably inclined.

"If they scheduled the vote today, I'd vote against it." Rep. Mike Ross, a Democrat, commenting on the uncertainty surrounding a possible debate next week, said he felt "like a fireman waiting for the alarm bell to go off." He worried about the government putting up so much cash without strict conditions on its use or an equity stake in the companies receiving help.

Next, Ross said, it would be the airlines asking for federal assistance.

"Where does it stop ?" Ross noted that some congressmen have pushed for a bailout because the automakers are "too big to fail" and reasoning that since they are so interconnected with a network of suppliers, going out of business would have a punishing ripple effect on jobs nationwide.

"My response to this is, then they're too big," Ross said. "We can't let any company become so big that they would destroy the economy." Information for this article was contributed by David Espo of The Associated Press.

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